Alternative Payments for Business

Alternative Payments for Business Robert Merryman Senior Vice President, O.R. Colan AssociatesLeslie Beaird Relocation Manager, Universal Field Services, IncMarshall Wainright Lead Realty Specialist, Federal Highway Administration

Alternative Payments for Business

Johns Machine Shop

John has a small machine shop specializing in custom parts and tools He rents the building he occupies. Recently he secured two new long-term contracts that have project acquisition. John is not happy. He feels the timing of the move is bad. However, he informs you that if all the pieces fall right this move might be timely for his business.


Johns Machine ShopThe new location he envisions is about twice the size of his existing work area. He intends to restructure the business so that he can handle the increased business.John would like to employ an industrial engineer to assist him in determining which of his equipment should be replaced or abandoned. John informs you that he will not be moving any of his plating tanks. John has decided that at a minimum he wants to replace his drill presses with newer machines. He also has a large quantity of scrap metal behind his building


The Regulations: Title 49 Code of Federal Regulations Part 24Professional Move PlannersPurchase of Substitute Property and Actual Direct Loss of Tangible Personal PropertyLow Value/High Bulk

Robert N. Merryman

What is a Professional Move PlannerA person who derives his principal income from planning movesRarely a self-move item

A person with specific skills needed to manage a move or specific items of equipment

The person does not need Uniform Act expertise

Why Would a Business Need a Move PlannerThe business acknowledges that it does not know how to conduct the movewe know how to operate this equipment, but not move it

The business has specific technical questions that precede the move- I need help laying out my equipment at the replacement site

The business finds it cannot meet the agencys schedule- TriMet spokeswoman Mary Fetsch said it took a while for the company to determine what it wanted to do, and wheels did not start to turn in the moving process until the company augmented its condemnation attorney with a business consultant [Move Planner] and business attorney.

What Do the Regulations Tell Us #1 In the planning section of the regulations:

24.205(c)(2)(i)(B) Determination of the need for outside specialists that will be required to assist in planning the move actual move and in reinstallation of machinery and/or other personal property.

What Do the Regulations Tell Us #2In the eligible actual moving expenses section of the regulations:

24.301(g) (12) Professional services as the Agency determines to be actual, reasonable and necessary for: (i) Planning the move of the personal property; (ii) Moving the personal property; and (iii) Installing the relocated personal property at the replacement location.

How Is This Service PaidThe business contracts for the service

The business pays the cost

The agency reimburses for the eligible costsThe standard is reasonable cost, not low bidThe business may contract for services not eligible for reimbursement

How Does the Agency Control the CostAssess the Scope of Work for the proposed services

Determine the hourly rates to be reasonable

Determine the overall cost to be reasonable

Control any change orders

What does John WantAdequacy of the replacement site: Can his business operate at the identified location

Functional layout: John wants a good layout

Assistance with utility capacity: Will the utilities meet his needs or do they need to be enhanced

Code issues: Sprinklers, noise, fumes, etc.

Status of equipment: What should he move, abandon, or replace

Two War TalesFlorida DOT A great example

Massachusetts Highways Fraud conviction for the planner

Substitute Personal Property & Direct Loss of Tangible Personal Property

Leslie Beaird


Substitute Personal PropertyWhat is it? An entitlement based on a business decision to replace an item of personal property rather than move it. How is the entitlement calculated? The lesser of the cost of the substituted item including installation minus any proceeds from sale or trade-in of the replaced item; or the estimated cost of moving and reinstalling the item.


Substitute Personal PropertyWhat must the business do in order to receive the entitlement? The business must make a good faith effort to either sell or trade-in the item being replaced and they must also purchase the replacement item.


Substitute Personal PropertyExamples Phone SystemsFurnitureEquipment

Any item of personal property that the business wants to replace or upgrade.


Substitute Personal Property Calculation100.00500.00175.00325.00100.00


Direct Loss of Tangible Personal PropertyWhat is it? An entitlement as a result of moving or discontinuing the business or farm operation. How is the entitlement calculated? It is the lesser of the fair market value in place of the item as is for continued use, less the proceeds from its sale; or The estimated cost of moving the item, as is, but not including any allowance for storage or for reconnecting a piece of equipment if stored or not being used.


Direct Loss of Tangible Personal PropertyWhat is value in place as is for continue use? Generally the item will be valued based on the current cost of the item as installed at the displacement site, depreciated to reflect the current condition and estimated remaining useful life. It may not include costs that reflect code requirements that were not in effect or installation costs if not currently installed. Standard professional personal property appraisal methods are acceptable.


Direct Loss of Tangible Personal PropertyWhat does as is have to do with the move cost? Like value in place as is, the estimated moving cost for an item is also to be limited to the as is condition of the item. The move cost estimate may not include reconnect costs for an item that was not operable or connected at the displacement site, they may only reflect the estimate to install the item as it currently exists.


Direct Loss of Tangible Personal PropertyWhat must the business do in order to receive the entitlement? The business must first make a good faith effort to sell the item being replaced, unless the Agency determines that such effort is not necessary.


Direct Loss of Tangible Personal PropertyExamplesEquipment Plating tanks

Inventory (when payment for property loss is claimed for goods held for sale, the fair market value shall be based on the cost of the goods to the business, not the potential selling prices)Any item of personal property that the business no longer needs.


Direct Loss of Tangible Personal Property Calculation600.00500.00300.00200.00200.00

Low Value/High Bulk

Marshall Wainright

Low Value/High Bulk

Low Value/High BulkCost to move an item is more than its value in the judgment of the AgencyThe displaced business is not obligated to move the personal property

49 CFR 24.301(g)(18)

Low Value/High Bulk

Examples:

StockpiledSandGravelMineralsMetalsOther similar items

Low Value/High Bulk

Questions

What kind of metal?How much metal?Where does he sell it?What is the price for scrap metal?What is the cost of a comparable quantity delivered to the new location?What is the cost to move? What is the payment?

Low Value/High Bulk

Low Value/High Bulk


Questions?

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Documents

Alternative Payments for Business